As Passed by the House 1
123rd General Assembly 4
Regular Session Am. S. B. No. 18 5
1999-2000 6
SENATORS DRAKE-PRENTISS-ARMBRUSTER-SPADA-RAY- 9
REPRESENTATIVES TRAKAS-SULLIVAN-D. MILLER-CALVERT-DePIERO-
AMSTUTZ-HARRIS-MEAD-YOUNG-O'BRIEN-SCHURING-CORBIN-PATTON- 10
LOGAN-THOMAS-HOUSEHOLDER-OPFER-AUSTRIA-WILLAMOWSKI 11
_________________________________________________________________ 12
A B I L L
To amend section 1335.11 of the Revised Code to 14
regulate contracts for the solicitation by a 15
sales representative of product or service orders
whether or not the place of business of the 16
manufacturer or distributor of the product is in 17
Ohio, to define "termination" of a contract, to 19
specify that exemplary damages may be awarded for
a failure to pay on a timely basis commissions 20
due that constitutes willful, wanton, or reckless 21
misconduct or bad faith, and to create a 22
presumption when bad faith exists.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 24
Section 1. That section 1335.11 of the Revised Code be 26
amended to read as follows: 27
Sec. 1335.11. (A) As used in this section: 36
(1) "Commission" means compensation accruing to a person 38
for payment by another person, the rate of which is expressed as 39
a percentage of the dollar amount of orders, sales, or profits. 40
(2) "Principal" means any A person who does not have a 42
permanent or fixed place of business in this state and who does 43
all of the following: 44
(a) Engages in EITHER OF the FOLLOWING: 46
(i) THE business of manufacturing, producing, importing, 49
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or distributing one or more products for sale to customers who 50
purchase products for resale OR FOR CONSUMPTION OR UTILIZATION IN 51
THE MANUFACTURING PROCESS;
(ii) THE BUSINESS OF PROVIDING SERVICES TO CUSTOMERS. 54
(b) Utilizes one or more sales representatives to solicit 56
wholesale orders for those products OR ORDERS FOR THOSE SERVICES; 58
(c) Compensates the sales representatives in whole or in 60
part by commission. 61
(3) "Sales representative" means a person who contracts 63
with a principal to solicit wholesale orders for a product within 65
this state OR ORDERS FOR THE PROVISION OF SERVICES and who is 66
compensated, in whole or in part, by commission, but does not 68
include a person who places orders for or purchases the product 69
for his THAT PERSON'S own account for resale OR PLACES ORDERS FOR 70
THE PROVISION OF OR PURCHASES SERVICES FOR THAT PERSON'S OWN 71
ACCOUNT, a person who is an employee of a principal, or a person 72
who sells the product to the ultimate consumer CONTRACTS WITH A 73
PRINCIPAL TO SOLICIT WITHIN THIS STATE ORDERS FOR A PRODUCT OR 74
ORDERS FOR THE PERFORMANCE OF SERVICES AND WHO IS NOT 75
COMPENSATED, IN WHOLE OR IN PART, BY COMMISSION. 76
(4) "TERMINATION" MEANS THE END OF THE PERFORMANCE OF 77
SERVICES BY A SALES REPRESENTATIVE FOR A PRINCIPAL, INCLUDING 78
DISCHARGE OF THE SALES REPRESENTATIVE BY THE PRINCIPAL, 79
RESIGNATION OF THE SALES REPRESENTATIVE, OR EXPIRATION OF THE 80
CONTRACT BETWEEN THE SALES REPRESENTATIVE AND THE PRINCIPAL. 81
(B) For purposes of this section, the time at which a 83
commission is due to a sales representative shall be determined 84
in the following manner: 85
(1) If the contract between the principal and the sales 87
representative is in writing and its terms unambiguously and 88
clearly specify when the commission is due, the terms of the 89
contract shall control the determination;. 90
(2) If the contract between the principal and the sales 92
representative is not in writing, or if the contract between them 93
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is in writing but its terms do not specify when the commission is 94
due or its terms are ambiguous or unclear, the past practice used 95
by the principal and the sales representative shall control the 96
determination;. 97
(3) If neither division (B)(1) nor (B)(2) of this section 99
can be used to clearly ascertain when a commission is due, the 100
custom and usage prevalent in this state for the principal's and 101
sales representative's industry shall control the determination. 102
(C) If UPON THE TERMINATION OF a contract between a 104
principal and a sales representative for the solicitation of 106
wholesale orders is terminated FOR A PRODUCT OR ORDERS FOR 107
SERVICES, the principal shall pay the sales representative all 108
commissions due him THE SALES REPRESENTATIVE at the time of the 109
termination within thirteen THIRTY days of the termination, and 111
shall pay the sales representative all commissions that become 113
due after the termination within thirteen days of the date on 114
which the commissions become due.
(D) A principal who fails to comply with division (C) of 116
this section or with any contractual provision concerning timely 117
payment of commissions due upon termination of a contract with a 118
sales representative, is liable in a civil action for exemplary 119
damages in an amount not to exceed three times the amount of the 120
commissions owed to the sales representative IF THE SALES 121
REPRESENTATIVE PROVES THAT THE PRINCIPAL'S FAILURE TO COMPLY WITH 122
DIVISION (C) OF THIS SECTION OR THE CONTRACTUAL PROVISION 123
CONSTITUTED WILLFUL, WANTON, OR RECKLESS MISCONDUCT OR BAD FAITH. 124
IF A PRINCIPAL RECEIVES A WRITTEN DEMAND FOR PAYMENT OF THE 125
COMMISSIONS OWED TO A SALES REPRESENTATIVE THAT WAS SENT BY
CERTIFIED MAIL, THE FAILURE OF THE PRINCIPAL TO RESPOND TO THE 126
WRITTEN DEMAND IN WRITING WITHIN TWENTY DAYS AFTER THE PRINCIPAL 128
RECEIVES THE WRITTEN DEMAND SHALL RAISE A PRESUMPTION THAT THE 129
PRINCIPAL ACTED WILLFULLY AND IN BAD FAITH. The prevailing party 131
in an action brought under this section is entitled to reasonable 132
attorney's fees and court costs.
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(E) Division (A)(1) of section 2307.382 of the Revised 134
Code applies to a principal who is not a resident of this state 135
and who enters into an agreement with a sales representative for 136
the solicitation of orders in this state, to authorize the 137
exercise by a court of personal jurisdiction over the principal. 138
(F) Any provision in any contract between a sales 140
representative and principal purporting to waive IS VOID IF IT 141
PURPORTS TO DO ANY OF THE FOLLOWING: 142
(1) WAIVE any of the provisions of this section is void; 145
(2) MAKE THE CONTRACT SUBJECT TO THE LAWS OF ANOTHER 147
STATE;
(3) LIMIT THE RIGHT OF THE SALES REPRESENTATIVE TO 149
INITIATE LITIGATION OR ALTERNATIVE DISPUTE RESOLUTION IN THIS 150
STATE.
(G) Nothing in this section invalidates or restricts any 152
other or additional right or remedy available to a sales 153
representative, or precludes a sales representative from seeking 154
to recover in one action on all claims against a principal. 155
(H) THIS SECTION DOES NOT APPLY TO ANY PERSON LICENSED BY 157
THE SUPERINTENDENT OF INSURANCE TO ENGAGE IN THE BUSINESS OF 158
ISSUING OR SELLING INSURANCE, AS DEFINED IN DIVISION (D) OF 160
SECTION 3901.19 OF THE REVISED CODE.
Section 2. That existing section 1335.11 of the Revised 161
Code is hereby repealed. 163